* Q2 adj earnings/shr C$2.28 vs. est C$2.23
* Raises dividend by C$0.03 to C$1.09
* Reports C$25 mln in impaired energy loans (Adds background on banking stocks; updates share price)
By Amrutha Gayathri
May 28 (Reuters) - Canadian Imperial Bank of Commerce reported a better-than-expected quarterly profit on Thursday, boosted by higher client trading, and raised its dividend for the third straight quarter.
The quarterly dividend increase of 3 Canadian cents per share to C$1.09 pushed the bank's shareholder payout ratio to the higher end of its target of 40-50 percent of earnings.
On an adjusted basis, net income attributable to shareholders rose to C$2.28 per share in the second quarter ended April 30. Analysts on average had expected C$2.23 per share, according to Thomson Reuters I/B/E/S.
Net income in its wholesale banking unit rose about 17 percent to C$250 million.
"Trading and underwriting revenues can be volatile, so it's hard to say they will continue to be as strong as recently reported," Edward Jones analyst James Shanahan said.
Net income in the bank's retail and business banking division, its biggest, rose 6.8 percent to C$583 million due to volume growth and higher fees.
The bank reported C$25 million in impaired loans and provided for C$10 million in credit losses for the energy sector.
However, Chief Risk Officer Laura Dottori-Attanasio said on a conference call that credit quality of the bank's commercial and corporate energy portfolio and retail portfolios affected by oil prices "remained relatively stable".
Profit in the bank's wealth management unit rose about 10 percent to C$129 million.
Adjusted total revenue rose 6.7 percent to C$3.52 billion.
Most banking shares were under pressure on Thursday despite reports of solid results, as investors remained concerned about any potential impact from a slowdown in oil prices and weakness in the Canadian economy.
Royal Bank of Canada, the country's top lender, and Toronto Dominion Bank also reported results that topped analysts' estimates.
A day earlier, Bank of Montreal and National Bank of Canada reported higher-than-expected quarterly profits and raised their dividends.
CIBC shares, which had fallen about 5 percent this year on the Toronto Stock Exchange, were slightly higher at C$95.47 late Thursday afternoon. ($1 = C$1.25) (Additional reporting by John Tilak in Toronto; editing by Joyjeet Das, Sriraj Kalluvila and Richard Chang)